Rising energy bills, supply chain issues and consumer confidence taking a hit as inflation bites means the environment for small businesses is bleak.
For many it has presented the opportunity to start a side hustle to supplement income but it is a daunting prospect.
The survival rate of start-ups is notoriously poor and is likely to be for some time, but a recent study reveals the best cities for starting a small business and which sectors have the highest survival rate.
Bournemouth is the best UK city to start a business, according to Bionic’s study
Where do you have the best chance of success?
Bournemouth is the number one place to start a business because of the large market gap in the area, according to a study by Bionic.
Bionic has looked at five key metrics to identify which cities have the potential to be lucrative for small businesses.
These include footfall data, the number of unemployed and average disposable income after tax and deductions for each household.
Bournemouth is followed by Leeds, York and Doncaster with a strong showing for the Yorkshire and Humber region while Newcastle upon Tyne takes the fifth spot.
Les Roberts, content manager at Bionic said: ‘In terms of post-Covid footfall recovery, Bournemouth ranks within the top ten of the cities that have bounced back; with the local population excited to visit the high street following years of lockdown.
‘In contrast, London has the worst footfall recovery rate, and Manchester also falls low in this respect.
‘When calculating spend score (offline, in-person sales recovery rate in each location since Covid), our study shows that London has the third worst spend score.
‘This shows a lot of people in these bigger cities have moved their purchasing online, meaning local smaller businesses have less local customers.
‘In contrast, Bournemouth has more people spending money offline locally post-lockdown than before 2020.’
Bristol topped the list for businesses with the highest survival rate of 44.36 per cent – 1,140 out of the 2,570 registered startups survived five years.
It was followed closely by Brighton and Hove which registered a 44.13 per cent, followed by Leeds with 42.88 per cent and Sheffield with 42.66 per cent.
Out of the 83,600 businesses set up in London in one year, just 39.35 per cent made it to five years.
Roberts said: ‘There are a wide variety of indicators we suspect have largely contributed to Bristol and Brighton and Hove having higher survival rates compared to London or Manchester.
‘These cities do have a long history of championing independent economies. In 2020 the World Economic Forum reported that Brighton was in the top ten towns and cities for population diversity which positively affects entrepreneurship.
‘Bristol also offers a wealth of support available to small business owners, such as the South West Investment Group, a not-for-profit organisation that supports SMEs, and Outset Bristol, a free programme to help set up and grow small businesses in the area.’
Which sectors have the best survival rate?
Bionic’s study shows certain types of businesses have proved more popular among entrepreneurs. More than 24,000 businesses in the area of computer programming and consultancy were set up in 2013 while just 310 drinks manufacturers were created.
Despite the small number of microbreweries or small-batch speciality gin brands, it has proved successful with a 53.23 per cent chance of survival after five years.
Other popular sectors included engineering and manufacturing although both of their survival rates were under 50 per cent.
Businesses classed as ‘activites of membership organisations’ have the highest survival rate among industries.
Companies in this industry included fundraising organisations, environmental movements, and even youth clubs.